TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 807
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....otal income at Rs.9,42,55,370/-. During the course of the scrutiny assessment proceedings, from the computation of income, the AO noticed that the Assessee has claimed broken period interest of Rs.9,49,66,036/- paid on purchase of securities as revenue expenditure. Drawing support from the findings given in A.Y. 1995-96, the AO declined the claim of broken period interest of Rs.9,49,66,036/- as revenue expenditure and disallowed the same accordingly. The Assessee carried the matter before CIT(A). CIT(A) at para 5 of his order relied upon the findings of his predecessor for A.Y 1995-96 and confirmed the disallowance of the broken period interest. Aggrieved by this, the Assessee is before us. 3.1 The Ld. Sr. Counsel drew our attention to the order of the Tribunal in ITA No. 4979/Mum/1999 for A.Y 1995-96. It is the say of the Ld. Sr. Counsel that an identical issue was decided by the Tribunal in the immediately preceding A.Y. in the favour of the Assessee. Therefore, the same view deserves to be taken. 3.2 The Ld. DR fairly conceded that the issue is covered by the decision of the Tribunal in Assessee's own case for A.Y. 1995-96. 3.3 We have carefully perused the order of the lower....
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....hese cases the Lessee had approached the Assessee with a request for finance, either for acquisition of a specified asset selected by them for purchase from a particular supplier or to meet their liabilities and the Assessee had agreed to provide finance in the form of lease finance. The AO was of the firm belief that all these transactions have to be construed under general law as loan transactions looking to the substance of the transactions and are not to be treated as true lease transactions. The AO was of the firm belief that it is not a transaction of lease but a transaction of loan or finance in reality with the assets held in the name of the Assessee only for the purpose of security. Hence, the Assessee is not entitled to depreciation on equipment leased out during the year including depreciation on sale and lease back transactions as the requisite conditions of ownership of the assets envisaged in Sec. 32(1) are not satisfied in this case. The AO disallowed the depreciation, however, at the same time, the AO was of the opinion that the finance component of the rental received in the year is to be brought to tax and the capital component of the lease rental representing ins....
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....on'ble Delhi High Court in the case of Cosmos Films, 338 ITR 266 and the Tribunal, Mumbai Benches in the case of Development Credit Bank Ltd. in ITA Nos. 3006/Mum/2001, 4892/Mum/2003 and in the case of SICOM in ITA Nos. 7901 & 7955/Mum/2003 and in the case of L&T in ITA Nos. 2200 & 2803/Mum/2000 and 2890 & 3533/Mum/2001. It is the say of the Ld. Sr. Counsel that in the light of the judicial precedents, the claim of the Assessee should be allowed. 4.2 The Ld. DR submitted that insofar as the depreciation relating to the leased assets to M/s. Rajendra Steels Ltd. is concerned, he relies on the order of the lower authorities below and insofar as the claim of depreciation on other leased assets is concerned, in the decisions relied on by the Ld. Sr. Counsel, the decision of the Hon'ble Supreme Court in the case of Asea Brown Boveri, 154 Taxmann.com 154 has not been considered, therefore, the findings of CIT(A) deserves to be confirmed. 4.3 We have carefully perused the order of the lower authorities and the relevant material evidences brought on record before us. We have also carefully gone through the decisions relied upon by both the parties. In so far as the issue relating to the ....
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....ssessee was never allowed any opportunity of crossexamination. CIT(A) rubbished the claim of the Assessee relying upon the decision of the Tribunal in the case of GTC Industries Ltd., 65 ITD 383. CIT(A) has extracted one paragraph from the said decision of the Tribunal which reads as under : "The principles of natural justice do not require formal cross examination. Formal cross examination is a part of procedural justice. It is governed by the rule of evidence and is the creation of the Court. It is part of the legal and statutory justice and not a part of natural justice. Therefore, it cannot be laid down as a general proposition of law that the revenue could not rely on any evidence which had not been subjected to cross examination." We have carefully gone through the decision in the case of GTC Industries Ltd. (supra). We find that the CIT(A) has not understood the decision of the Tribunal in its correct perspective. The Tribunal has further held as under : "105. In our opinion right to cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, 'audi alteram partem'. The principles of natural justice do not require for....